The Lenovo Firms Supply Chain Management

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It goes without saying that high-quality customer service plays an immeasurably important role in the companys stable growth and development. In the present day, Lenovo manages one of the largest and highly complex global supply chain networks with more than 30 manufacturing sites and 2,000 suppliers across the globe aiming to deliver approximately 100 million products to retailers, partners, and end-customers in 180 markets (Arora, 2020). At the same time, the company understands that even a single weak link in the chain can lead to major breakdowns in the customer experience (Arora, 2020, para. 1). That is why it constantly develops the capacities of its supply chain incorporating big data analytics, including blockchain, IoT, 5G, AR, and AI, and integrating customer data for sharing and feedback in real-time.

In relation to its supply chain, Lenovo is guided by the principles of the prevention of quality problems that will inevitably lead to customer dissatisfaction after-sales costs by looking forward. Thus, the companys smarter supply chain assesses customer data throughout the systems entirety for the reduction of redundancy and lag response and the achievement of reasonable planning, order delivery, and network layout (Arora, 2020). In addition, in order to avoid supply chain-related errors and satisfy consumers, Lenovo has implemented the Digital Distribution Center (DDC), a smart warehouse solution for highly optimized and accurate performance. It comprises smart feedback lights, smart cameras, and a gateway equipped with a management solution device. Created in collaboration with NVIDIA and Microsoft, this solution is highly efficient in relation to small packages at physical stores as it uses machine learning, AI, and multi-video stream analytics to track, validate, and detect products, find mission ones, and identify damaged packages in real-time.

Thus, communication with suppliers, partners, retailers, and consumers and the incorporation of big data analytics and new technologies while operating on a global scale provide multiple benefits for Lenovo, including shorter cycle times, fewer errors, extended visibility, and greater reliability, that positively impact total logistics costs. The companys model of integrated business planning is based on manufacturing, procurement, and logistics it manages the network to reduce costs and increase value. Lenovo aims to determine the most suitable landed cost, including transportation costs, packaging charges, taxes, insurance, and other fees optimizing manufacturing and routes to deliver products carefully and in a time-sensitive manner.

In addition, Lenovos response to societys demand for sustainability not only in manufacturing but at all stages of the supply chain creates competitive advantages in the market. Identifying sustainability as its main logistics strategy, the company aims to reduce freight emissions and waste from packaging. Thus, it works closely with partners for the optimization of transportation and container utilization (Smart Freight Center, n.d.). Lenovo distributes products according to their size and destination for cost-efficient transportation, increases rail transportation where it is available, and switches from wood pallets to light plywood ones to improve their utilization (Smart Freight Center, n.d.). All in all, the company is constantly improving its programs and implementing new ones, such as the SAP Advanced Planning and Optimization component on the SAP HANA to plan and execute supply chain processes, perform calculations related to cost forecasting, and support supplier collaboration (Ward, 2017). Product security, sustainability, customer centricity, and real-time planning are the elements of Lenovos supply chain that made the company competitive and respectful all over the world.

At the same time, the companys stock-turn ratio in inventory management may provoke particular concerns. In general, this ratio indicates how many times the companys inventory has been sold and replenished during an identified amount of time. In 2021, Lenovos inventory turnover ratio was 1.70 (Lenovo Group inventory turnover ratio 2010-2021 | LNVGY, no date). On the one hand, high ratio is more preferable and indicates the companys development. On the other hand, ratio may vary in dependence on the industry thus, for large corporations, especially with high-end product, relatively low ratio may be regarded as a norm.